Zero-Hours Contract Reform: What Employers Should Prepare for

Zero-hours and casual contracts have long been used by employers who need flexibility. In sectors such as care, hospitality, retail, cleaning, leisure and events, flexible staffing arrangements can help businesses respond to fluctuating demand, staff absence, seasonal peaks and changing service needs.

However, reform is coming.

The Employment Rights Act 2025 includes changes aimed at ending one-sided flexibility in zero-hours and similar contracts. The detail will continue to develop through regulations and guidance, but the direction of travel is clear: employers will need to be much more intentional about how they use casual, variable-hours and low-hours arrangements.

The government's consultation on how these reforms will work in practice closed on 25 August 2026, so further detail is expected in due course. Employers who wait for every last detail before acting are likely to find themselves with very little runway when the rules do land.

For employers, this is not a reason to panic. Zero-hours and casual arrangements are not automatically unlawful or inappropriate. In some settings, they can still serve a legitimate business purpose.

The issue is whether the contract reflects the reality of the working arrangement.

If someone is regularly working broadly the same hours every week, being relied on as part of the core workforce, or being managed as though they have fixed hours, employers need to consider whether a zero-hours arrangement remains appropriate.

What is changing?

The reforms are focused on reducing one-sided flexibility.

In broad terms, the changes are expected to introduce stronger rights around:

• guaranteed hours, where workers regularly work more hours than their contract guarantees;
• reasonable notice of shifts, so workers are not routinely expected to accept work at very short notice; and
• payment where shifts are cancelled, moved or curtailed at short notice.

The purpose is to address situations where workers carry too much of the financial risk of unpredictable work, while employers retain maximum flexibility.

Some of the detail is still being worked out. The recent government consultation looked at where the threshold for a “low-hours” contract should sit, with options ranging from 8 to 48 hours a week and a stated government preference somewhere between 8 and 20. It also considered the reference period for guaranteed hours, with 12 weeks appearing to be the government's expected starting point. None of this is confirmed yet, but it gives employers a useful sense of the scale of what is coming.

Agency workers are also expected to be covered. Both agencies and end hirers are likely to have responsibilities around reasonable shift notice and cancellation payments, which means employers who rely on agency workers to fill rota gaps should not overlook this part of the reform.

For employers, the practical impact is likely to be significant. Businesses that rely heavily on zero-hours, casual, bank or low-hours contracts will need to review whether their current arrangements are sustainable, properly documented and genuinely reflective of business need.

Zero-hours contracts are not the problem on their own

It is important to be balanced.

Zero-hours contracts are not automatically bad. They can work well where both parties genuinely want flexibility. For example, they may suit students, semi-retired workers, people with caring responsibilities, or those who only want occasional work.

They may also be useful where demand is genuinely unpredictable, such as events, seasonal trading, emergency cover, or irregular client needs.

The problem arises where zero-hours contracts are used in name only, while the reality looks much more like regular employment.

Examples may include:

• a worker doing broadly the same shifts every week;
• a worker being expected to remain available even though hours are not guaranteed;
• a worker being treated as core staff but kept on a casual contract;
• regular hours being offered for months without any review of contractual status;
• shifts being cancelled at short notice without pay;
• workers feeling unable to refuse shifts because they fear losing future work; or
• managers using zero-hours arrangements to avoid proper workforce planning.

Where that happens, the risk is no longer just contractual. It becomes an HR governance issue.

Why employers should review arrangements now

Although the detailed implementation of the reforms will continue to develop, employers should not wait until the last minute.

The organisations most likely to be affected are those that have a significant casual, bank, seasonal or variable-hours workforce. This includes employers who use zero-hours contracts formally, but also those who use low-hours contracts where the worker routinely works far more than their guaranteed hours.

The practical questions employers should be asking now include:

• Do we know who is on a zero-hours, casual, bank or low-hours contract?
• Are these workers genuinely working irregularly, or are they working predictable patterns?
• Are managers relying on casual workers as part of the core rota?
• How often are shifts cancelled, changed or shortened?
• How much notice do workers usually receive of their shifts?
• Are workers being paid correctly for all hours worked?
• Are holiday pay and working time records accurate?
• Do our contracts match what is happening in practice?
• Are managers clear on what they can and cannot say when offering shifts?
• Do we use agency workers, and would they be affected by the same reforms?

These questions matter because compliance problems often arise when the paperwork says one thing, but workplace practice says another.

The risk of “contract says zero, rota says regular”

One of the biggest risks for employers is inconsistency between the contract and the rota.

A contract may say that there are no guaranteed hours. But if the rota shows that the individual works the same days and times most weeks, the arrangement may not look genuinely casual in practice.

This matters because the reforms are aimed at giving workers more security where their actual working pattern shows a level of regularity.

For employers, the safest approach is to review actual working patterns, not just contract labels.

If a worker is regularly working 20, 30 or 40 hours per week, employers should ask whether the arrangement should be moved to a guaranteed-hours contract, part-time contract, annualised-hours arrangement or another more accurate model.

This does not mean every casual worker needs a fixed contract immediately. But it does mean employers should be able to justify why the arrangement is genuinely flexible.

Shift cancellation and short-notice changes

Another important area is shift cancellation.

Current guidance already makes clear that cancelling work at late notice, or when the individual turns up for work, is poor practice unless truly unavoidable. The reforms are expected to increase protection where shifts are cancelled, moved or curtailed at short notice.

Employers should therefore review how shift changes are currently managed.

For example:

• Who has authority to cancel shifts?
• How much notice is usually given?
• Are cancellations recorded?
• Are workers compensated where appropriate?
• Are shifts sometimes shortened after the worker has arrived?
• Are managers changing rotas informally by text or WhatsApp?
• Are workers given enough notice to plan childcare, travel and other responsibilities?

Poor shift management can create more than legal risk. It can also damage trust, morale, retention and employer reputation.

Guaranteed hours: what employers should start thinking about

The guaranteed-hours reform is likely to require employers to look at the gap between what the contract guarantees and what the worker actually works.

Where someone regularly works more than their guaranteed hours, the employer may need to offer a contract that better reflects the hours they are actually working.

The detail will depend on final regulations, including the reference period and hours threshold mentioned earlier, but employers can start preparing now by understanding their workforce data.

Useful steps include:

• reviewing average hours worked over recent months;
• identifying workers whose actual hours are consistently higher than their contracted hours;
• checking whether regular patterns are temporary, seasonal or long-term;
• reviewing whether bank or casual workers are covering permanent staffing gaps;
• considering whether some roles should be converted into fixed-hours or guaranteed-hours roles; and
• budgeting for the potential impact of more predictable hours.

This is not just a legal exercise. It is a workforce planning exercise.

Care, hospitality and small employers may feel this most

The reforms are likely to be particularly relevant for employers in sectors where flexible labour is common.

In care, employers may use bank staff, casual support workers or zero-hours arrangements to manage fluctuating care packages, sickness absence, short-notice cover and changing client needs. Agencies used to fill gaps in care rotas will also need to factor the new rules into how they manage placements.

In hospitality, hours may vary depending on bookings, footfall, events, weather, seasonality and customer demand.

For small businesses, flexibility can feel essential because margins are tight and staffing costs are one of the biggest pressures.

However, the more flexible the workforce model, the more important it becomes to manage it properly. Employers will need to balance operational flexibility with fair treatment, clear communication and accurate records.

The question is not simply “can we still use zero-hours contracts?”

The better question is:

Are we using them for the right reasons, in the right way, and with the right controls?

What employers should do now

Employers do not need to wait until the reforms are fully in force before preparing. There are practical steps that can be taken now.

• Audit zero-hours, casual and low-hours contracts: identify who is on each type of arrangement and whether the contract reflects the reality of how they work.
• Review actual working patterns: look at rota and payroll data to identify workers who regularly work predictable or high hours.
• Check shift cancellation practices: review how often shifts are cancelled, changed or shortened, how much notice is given, and whether managers are following a consistent process.
• Update contracts and templates: make sure casual, bank and zero-hours contracts are clear, accurate and fit for purpose.
• Train managers on rota communication: managers should understand the importance of reasonable notice, accurate records and avoiding informal promises that conflict with the contract.
• Review payroll, holiday pay and working time records: employers should ensure workers are paid correctly for all hours worked and that holiday pay is calculated properly.
• Consider whether some roles need guaranteed hours: where workers are regularly working predictable hours, employers should consider whether a different contract type would be more appropriate.
• Check agency worker arrangements: where agency staff are used, clarify with the agency how responsibility for shift notice and cancellation payments will be shared once the rules apply.
• Plan for cost and operational impact: guaranteed hours, notice requirements and cancellation payments may affect staffing budgets, rota planning and service delivery.
• Keep clear records: employers should document shift offers, cancellations, hours worked, contractual changes and communications with workers.

A practical reminder for employers

The reforms are not just about legal compliance. They are about whether employers understand their workforce model.

If an organisation relies heavily on zero-hours or casual staff, it needs to know why. Is the flexibility genuinely required? Are the hours genuinely unpredictable? Are workers choosing flexibility, or are they carrying the risk of poor planning?

Employers who can answer those questions clearly will be in a much stronger position.

Employers who cannot may find themselves exposed when the new rules take effect.

Final thoughts

Zero-hours and casual contracts are not disappearing, but the way employers use them is changing.

The key issue will be whether the arrangement is fair, transparent and genuinely reflects the working reality.

For employers, now is the time to review contracts, rotas, payroll records, shift cancellation practices and manager guidance. Waiting until the rules are fully in force may leave too little time to make changes properly.

If your organisation uses zero-hours, casual, bank or low-hours contracts, we run a zero-hours contract audit that checks your current arrangements against actual working patterns, flags where contracts and rotas do not match, and gives you a clear action plan ahead of the guaranteed-hours reforms.

Disclaimer: This article is for general HR information only and does not constitute legal advice. Employers should seek legal advice on specific employment law matters or contractual decisions.